A Mental Model for Qualifying Customers.

The reason that it is said that time is money, is because time is a scarce commodity.

It is as if you had a new bank account each day with that was funded with $86,400, and each second one of those dollars was going to go, regardless if you spend it or not.

If time was literally money, most people would spend it wisely. Alas, this is not the case, and so time is squandered. Seneca told us that life is long — if we know how to use it, but he probably didn’t start a startup 😉

If you’re stupid enough to start a startup, you’ve thrown yourself off a cliff with a bunch of spare machine parts, and dragged a few, often young, unwitting fools with you. The trick is now to build something that can fly before you all smash into the ground at ever accelerating speeds.

The reason I love running and operating private companies, is that there this absolute sense of ownership that you don’t often get with working for someone else, especially in the public sector.

Every decision you make, you have to own for the long term.

Hire shitty people? That’s going to suck in a few months when your culture goes down the drain.

Rush out your software product that is full of hacks and tape? Enjoy grinding to a standstill later on as you are swamped with technical debt.

But, we can actually flip this on its head. Yes, you have to live with the decisions that you make, but then this is a great forcing function — you really need to think about the decisions that you make and thus you will often see successful startup founders that are essentially human decision machines.

They often precisely know what they to decide on, what can be delegated, and what’s just noise. They don’t get their decision-making wheels stuck in the mud, so to speak.

The way they do this is not by being the smartest people, but by using each decision as an aid to subsequent decisions. By building and refining mental models based on experience.

One has to be careful with a mental model. It is just a construct, not reality — in very much the same way as we should not confuse the map for the actual territory. When the ground does not match the map, it’s the map that’s wrong. Reality cannot be wrong, only our understanding of it can be wrong.

And yet, reliable ways to shortcut towards good decision-making can help, and this is what I want to speak about today with regards to qualifying customers.

For people who are not involved in enterprise sales or any time of professional services, it may seem strange. Why would you need to qualify a customer? Customers pay, so surely you want as many as possible? Well, if you’re selling ice-cream in a park or shipping goods out of a warehouse, then sure. If you’re serving customers on a long-term basis, then the quality of your customer basis is crucial to the long-term success of your business.

This is because good customers do a few things:

  1. They pay their bills on time.
  2. They don’t cause (too much) hassle.
  3. They advocate and bring you new customers.

A bad customers, funnily enough, does the precise opposite, which I think you’ll agree is not the type of customer you want as you’re growing your business.

Ok, so let’s talk about the model. This is my adaptation to the famous BANT model of customer qualification.

BANT stands for Budget, Authority, Need, Timing.

But, the issue I have with this model as it stands, is that it ignores the above 3 points on paying bills, being hassle-free, and being an advocate.

But, let’s discuss BANT, and then we can figure out an overall better framework.

Budget means that the customer has allocated the required budget to make the purchase. This is important as you need to ensure that you’re not wasting time with customers who can’t actually afford your product or service.

Authority means that the customer has the decision-making power to actually make the purchase. There’s no point trying to sell a new CRM system to a junior analyst. You want to be talking to people who have an influence on, or are directly responsible for, making purchasing decisions.

Need means that the customer actually needs what you’re offering. This one is tricky, as people often don’t know what they need until you show it to them. However, you can get an indication of whether there is a potential need by talking to the customer and understanding their current situation and pain-points. We can actually split need into two sub-categories, called capacity and ability. Capacity means that the customer has the ability actually to use your product or service. This might seem obvious, but you’d be surprised how often people want to buy products or services that they don’t have the capacity to use. For example, a small business might want to buy an enterprise-level CRM system, but they simply don’t have the staff or resources to make use of all its features. In this case, it would be a waste of time and money for both parties involved. Ability is similar to capacity, but it refers more to the customer’s ability actually to implement and get value from your product or service. Again, this might seem obvious, but you’d be surprised how often people want to buy products or services that they don’t have the ability to use. For example, a company might want to roll out a new software platform, but they don’t have the in-house expertise to actually make it work for them. In this case, it would be a waste of time and money for both parties involved.

Timing means that the customer is ready to make a purchase now, or in the near future. Again, this one can be tricky as people’s plans change, but you can try to get a sense for timing by asking questions about current plans and initiatives.

So, these are the four traditional criteria in the BANT model — which, to be honest, do work very well when trying to qualify new prospective customers.

But, do not forget to consider the three additional questions, especially if you’re running a small or medium-sized organization.

  1. Do they pay their bills on time?
  2. Are they likely to cause a lot of hassle?
  3. How likely are they to refer other customers?

As a final point, you do sometimes just want to “win a logo” — that is, you want to work with a particular customer just to show that your product or service can be used by that big-name organization, and that can help you more easily win work in the future.

In this case, it’s important to remember that the customer still needs to meet the other criteria for it to be worth your while, but you can sometimes try a bit harder even if are not fully qualified, because the lost time and risk may be worth it if you do win that customer.

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